BitMEX Research: If only cash subscriptions and redemptions are allowed, the ETF structure will lose most of its advantages

BitMEX Research issued a document on the X platform stating that the operation of ETFs is as follows: If an ETF trades at a premium, typically due to more buyers than sellers, then authorized participants (APs) have an incentive to purchase the underlying instruments and deliver them to the issuer in order to obtain new units of the ETF. Then, since the ETF trades at a premium, the AP can sell new units of the ETF in the market and make a profit. The opposite is true if the ETF trades at a discount. AP buys ETF units in the market, provides them to the issuer, and receives the underlying assets. The underlying assets are then sold at a profit (as the product trades at a discount). Most importantly, there should be multiple competing APs. This ensures the product can handle large flows and have low tracking errors. If only cash subscriptions and redemptions are allowed, most of the advantages of the ETF structure will be lost. Now, only the issuer can buy and sell Bitcoin on the market. Much of the competition that makes ETFs effective will cease to exist.